Analysis

Holcim revealed the board members for its proposed North America business this week. Former group CEO Jan Jenisch was confirmed as the designated chair and CEO. He will be joined by nine directors chosen from sectors including construction, manufacturing, industrial operations and financial services. Notably, current Holcim director Jürg Oleas will be joining Jenisch at the new company. He previously worked as the head of GEA Group and had senior stints at ABB and the Alstom Group.

The group’s decision to split its business in North America from that in the rest of the world has been presented as a piece of financial engineering designed to increase earnings, margins and increase the value of the business. Markets in the US and Europe have diverged in recent years, with the former growing and the latter slowing in comparison. Splitting the business should, in theory, allow both companies to grow at their own pace. However, the spin-off company in North America will remain linked to Europe as it will be listed at both the New York Stock Exchange and the SIX Swiss Exchange. The latter is for the benefit of European investors. The separation is expected by the end of the first half 2025, subject to shareholder and customary approvals.

Naturally, other companies are also chasing growth in North America. Titan Cement announced this week that its US-based subsidiary, Titan America, has filed a registration statement with the Securities and Exchange Commission as part of a proposed initial public offering (IPO). Yet, the company said that the offering is subject to market conditions. As such it couldn’t say when it might happen, how big it might be or much else. Back in May 2024 the group said it was going to list Titan America in the US to “...facilitate the group’s and Titan America’s future growth and unlock new opportunities.” The IPO was intended to be of a minority stake without creating any large-scale tax issues. At this time the transaction was planned to be completed in early 2025.

Titan’s sales share in North America has remained similar from 2018 to 2023 at around 55%. Holcim’s, by comparison, grew to 39% in 2023 from 22% in 2018. This is due to big acquisitions in the US such as Firestone Building Products in 2021 as it built up its lightweight building materials segment. The size of the two companies’ operations in North America are also different. Holcim reported net sales in the region of over US$11bn in 2023. Titan reported net sales of just under US$1.5bn.

Ireland-based CRH moved its stock market listings to the US earlier than both Holcim and Titan. It completed the transition of its primary listing to the New York Stock Exchange in mid-2023, although it too retains a listing in Europe, at the London Stock Exchange in its case. Yet analysts have started to wonder whether the company might spin-off its businesses outside the US. As reported by the Irish Times, Bank of America analysts reckon that the non-US parts of the company now represent only 16% of the US$82bn concern. For sanity’s sake this is still a US$10bn-plus sized company! Although other commentators did wonder why CRH might have bought assets in Australia in 2024 if it was seriously considering making changes on this scale anytime soon.

Despite all this attention on the US and North America by some of the multinational cement producers, it is worth remembering that markets change over time. Europe may not look so hot right now but it is unlikely to stay like this. The head of Heidelberg Materials, for example, said in early 2024 that his company wasn’t planning a split in the US because it was focusing on decarbonisation. This may prove prescient in the longer term if Europe sticks to its sustainability goals. FInally, the US isn’t the only place where cement companies are attempting to build their value in growth markets. It was also reported this week that JSW Cement had obtained approval from the Securities and Exchange Board of India to proceed with its IPO.

Consolidation in the Indian cement sector continued through December 2024. UltraTech Cement completed its acquisition of a larger stake in The India Cements late in the month. Then, this week, Nuvoco Vistas said that it was preparing to buy Vadraj Cement. Along similar lines, JK Lakshmi Cement also confirmed that it was moving ahead with the merger of its cement-related subsidiaries.

The UltraTech Cement deal was approved by its board of directors in July 2024 but it took until 24 December 2024 before it formally completed the purchase of an additional 33% stake in The India Cements. The deal was valued at around US$460m in mid-2024 by local press. UltraTech Cement now owns just under a 55% stake in the company and is its majority shareholder. Back in July 2024 UltraTech Cement said that The India Cements had a total production capacity of around 14.5Mt/yr of ordinary Portland cement (OPC). Just under 13Mt/yr of this is based in the south of the country, mostly in Tamil Nadu, and 1.5Mt/yr is in Rajasthan.

The Nuvoco Vistas announcement follows a bidding process to acquire Vadraj Cement through a corporate insolvency process. Key parts of the deal include taking control of Vadraj Cement’s 6Mt/yr grinding plant in Surat and its 3.5Mt/yr integrated plant in Kutch. Both plants are in Gujarat. The agreement also includes limestone mining rights in the state and a captive jetty near the Kutch plant. However, the expression of interest for the insolvency proceedings, published in March 2024, revealed that the company’s operations have been suspended for five years. The grinding plant and the jetty were described as ‘partially constructed.’ Nuvoco Vistas has not disclosed how much it had bid to pay for the company, although it was keener in its press release to state that the transaction would see it become the fifth largest cement producer in India. It says that its cement production capacity will rise to 31Mt/yr; 19Mt/yr of this in the east, 6Mt/yr in the north and 6Mt/yr in the west. Synergies are also hoped for when the new assets are combined with Nuvoco Vistas’ current plants at Nimbol and Chittorgarh in Rajasthan.

Compared to the previous two news stories, the JK Lakshmi Cement merger plan is on a smaller scale but it follows the same trend. The cement producer presented its corporate restructuring plan to its shareholders in July 2024. It wants to merge JK Lakshmi Cement, its main cement company, with Udaipur Cement, Hidrive and Hansdeep. JK Lakshmi Cement runs two integrated cement plants at Sirohi, Rajasthan, and Durg, Chattisgarh respectively. It also operates what it calls ‘split location grinding’ plants at Kalol and Surat in Gujarat, at Jhamri in Haryana and at Cuttack in Odisha. Udaipur Cement operates one integrated plant in Rajasthan, Hidrive owns land next to the group’s Surat unit and Hansdeep is a preferred bidder for limestone resources in Nagaur, Rajasthan. The group’s clinker and cement production capacities are 10Mt/yr and 16.4Mt/yr. Its rationale is to gain synergies from production, distribution and logistics, to simplify the corporate structure, to improve efficiency and to raise shareholder value. That last one might be particularly useful for a cement producer looking to expand or sell in the future.

Further mergers and acquisitions are expected to happen in 2025 but at a slower rate than in 2024. Part of the dynamic so far has been that the highest demand is in the east and the highest capacity is in the south. Many of the deals announced in 2024 focused on markets in the south of the country. By contrast, analysts quoted in the Economic Times at the start of 2025 anticipate that new transactions might start to move to other regions. Obvious potential targets include Jaiprakash Associates and Heidelberg Materials. The first company became insolvent in 2024 and is likely to be sold off. Rumours of a potential purchase of the second company by Adani Group in the autumn hit the local press in October 2024. Doubtless there are other less visible possibilities too if the price is right. Read Global Cement Weekly in 2025 to find out what happens.

Typical! We published a cement sector news review for 2024 in the December 2024 issue of Global Cement Magazine and a load of big important events happened afterwards. So, here is a roundup of some of the major stories that have taken place in the last two months of the year.

The TL:DR (too long; didn't read) version of ‘Global Cement News in 2024’ was: focus on the US market by the multinationals; cement joining the emissions trading scheme in China as the world’s largest market stagnates; continued rivalry between UltraTech Cement and Adani Group in India as that sector grows; markets in the Middle East and North Africa adjusting to higher exports; the drawn out divestment of InterCement in Brazil; lots of new plants in Sub-Saharan Africa reflecting demographic trends; and an emphasis on construction and demolition materials in Europe but one on aggregates in North America.

However, from November 2024 onwards… Donald Trump was re-elected as President in the US, Quikrete put in an US$11.5bn deal to buy Summit Materials, the United Nations Climate Change Conference (COP29) in Azerbaijan ended in acrimony, Gautam Adani was accused of fraud by a US court and Huaxin Cement said it was buying Holcim’s majority stake in Lafarge Africa for US$1bn. These have all been covered in previous editions of Global Cement Weekly. Check them out for more information. One can tell it’s been a busy tail-end to the year though when a US$600m agreement by Heidelberg Materials North America to buy Giant Cement Holding did not make the top five, admittedly selective, noteworthy news stories of the last two months of 2024. These stories also, roughly, followed the trends highlighted in the ‘Global Cement News in 2024’ article.

To reflect on the Adani story a few weeks later, nothing much seems to have occurred. Yet. The share price of various Adani Group companies fell when the US authorities made the announcement in late November 2024 but they have mostly regained much of their value since then. The consensus by Reuters, this week, was that the US prosecutors have a strong case backed up by documentation but extradition seems unlikely. Adani himself has made public appearances in India since the allegations surfaced. One minor consequence has been that Gautam Adani exited the US$100bn Bloomberg Billionaires Index in 2024. This is likely to have been caused, in part at least, by the allegations from Hindenburg Research in 2023 and the current legal problems from the US bringing down share prices. On the cement side of Adani Group it appears to have been business as usual so far. A large-scale investment in Rajasthan was announced in December 2024 and, this week, plans to merge subsidiaries Sanghi Industries and Penna Cement with Ambuja Cements were disclosed.

Another general trend that we haven’t covered much online have been changes in the Australian market. Last week, Cement Australia, a joint venture between Heidelberg Materials Australia and Holcim Australia, said it was acquiring the cementitious division of the Buckeridge Group of Companies (BGC) for US$800m. This follows CRH’s purchase of a majority stake in AdBri that was approved by the latter’s shareholders over the summer. Around the same time, Seven Group Holdings completed its acquisition of the remaining 28% stake in Boral that it did not already own. For more on the situation in Australia and New Zealand read the article in the January 2025 issue of Global Cement Magazine.

That’s it for 2024. Unless another massive news story in the cement sector gets announced in the next week-and-a-half.

Global Cement Weekly will return on Wednesday 8 January 2025

Suvo Strategic Minerals said this week that it had made moves towards establishing a joint-venture between a subsidiary and the Huadi Bantaeng Industry Park (HBIP). The plan is to manufacture and sell low-carbon cement and concrete products that contain nickel slag and other byproducts. This news story is noteworthy because of the location of HBIP in South Sulawesi, Indonesia.

In a release to the Australian Securities Exchange Suvo explained that HBIP is the managing company of the Bantaeng Industrial Park, where ‘significant’ quantities of nickel slag are stockpiled as part of the local nickel pig iron operations. HBIP will supply the nickel slag to the joint-venture. It will also give it access to infrastructure such as land, port facilities and utilities. Suvo subsidiary Climate Tech Cement, for its part, will supply the low carbon cement and or concrete mixtures and/or formulations. This follows the signing of a memorandum of understanding in September 2024, in which the companies agreed to process the nickel slag into geopolymer cement and precast concrete materials.

At first glance Indonesia seems like an unlikely place to market a low-carbon cement or concrete product, given the large cement production overcapacity in the country. The Indonesian Cement Association (ASI) reported a production capacity of just under 120Mt/yr in 2024 and forecast a utilisation rate of 57% in November 2024. However, the government seems serious about reaching net zero by 2060 as the country’s economy develops. The ASI updated its decarbonisation roadmap in 2024 and the draft is currently under review with the Ministry of Industry and consultants from the Bandung Institute of Technology (ITB).

In the latest roadmap, carbon capture is at least a decade away, with the first large-scale capture tentatively anticipated from 2035 onwards. Although Indonesia launched its carbon trading scheme in 2023, it is not expected to start affecting the industrial sector until the late 2020s. Instead, the short-to-medium term Scope 1 reduction methods include increasing the use of alternative fuels, reducing the clinker factor of cement and reducing and/or optimising the specific thermal energy consumption of clinker. Initiatives such as Suvo’s joint-venture in South Sulawesi tie into that middle strand. Separately, over the summer of 2024 the government and producers said that they were working together to introduce and promote the use of Portland composite cement (PCC) and Portland pozzolana cement (PPC). At this time the ASI reckoned that a complete change could cut cement sector emissions by just over a quarter. In June 2024 local media also reported that ASI members were planning to supply low-carbon cement for the Nusantara capital city project to help it realise its aims as a ‘green city.’

Semen Indonesia, the country’s largest producer, reported a clinker factor of 69% in 2023 for all of its cement products, down from 71% in 2021. Limestone was the biggest substitute followed by trass and gypsum. It is currently aiming for a clinker factor of 61% by 2030. In its Sustainability Report for 2023 it said that it was promoting the use of non-OPC (Ordinary Portland Cement) cement “...according to the needs of construction applications.” It added that non-OPC products also had a “...5 - 15% more economical price.” However, the company has not said how its current sales are split between OPC and other products.

One of the surprises at the 26th Technical Symposium & Exhibition of the ASEAN Federation of Cement Manufacturers (AFCM), that took place in Kuala Lumpur in November 2024, was the sheer amount of work that has been going on outside of Europe and North America towards decarbonising building materials. The cement associations of Indonesia, Malaysia and Thailand all presented progress and targets towards this aim at the event. Suvo Strategic Minerals’ joint-venture plans in South Sulawesi are another example of this trend.

Closing points to note about the Suvo project are firstly that it is away from Indonesia’s main cement production area in Java. Secondly, the presumption is that the low-carbon cement and concrete products manufactured by the project will either be cheaper than the competition or benefit from green procurement rules. Finally, nickel slag reserves seem insufficient to reshape the entire national cement market. Yet a general move towards using more supplementary cementitious materials could. Watch this space for more developments.

Read a review of the 26th Technical Symposium & Exhibition of the ASEAN Federation of Cement Manufacturers (AFCM) in the forthcoming January 2024 issue of Global Cement Magazine

Huaxin Cement revealed this week that it is buying Holcim’s majority stake in Lafarge Africa for US$1bn. The moment marks a big step in the China-based cement producer’s international ambitions. It has been linked in the financial media to many divestments around the world in recent years. Yet this appears to be its largest acquisition so far and it adds to what is becoming a serious sized multinational business in Sub-Saharan Africa.

The details of the deal are that Holcim has agreed to sell its 83% share of Lafarge Africa to Huaxin Cement. Lafarge Africa operates four integrated cement plants in Nigeria at Sagamu and Ewekoro in Ogun State, at Mfamosing in Cross River State and the Ashaka Cement plant in Gombe State. It has a combined production capacity of 10.5Mt/yr. The transaction is expected to close in 2025 subject to regulatory approvals.

Holcim holds a relationship with Huaxin Cement that dates back to the late 1990s when it first bought a stake in the company. Following the formation of LafargeHolcim in the mid-2010s, Lafarge’s subsidiary Lafarge China Cement was sold to Huaxin Cement. At the end of 2023 Holcim reported that it owned just under a 42% share in the company. Huaxin Cement has also bought assets from Holcim as the latter company has divested subsidiaries over the last decade. In 2021 it bought Lafarge Zambia and Pan African Cement in Malawi from Holcim. This adds to other acquisitions in the region. In 2020 it purchased African Tanzanian Maweni Limestone from ARM Cement. Later in 2023 it picked up InterCement’s subsidiaries in Mozambique and South Africa. In addition, in October 2024 local media in Zimbabwe reported that the company was planning to build a grinding plant. Now, throw in the plants in Nigeria and Huaxin Cement is the second biggest cement producer in Sub-Saharan Africa after Dangote Cement.

Huaxin Cement said it had an overseas cement grinding capacity of just under 21Mt/yr at the end of 2023. However, this figure included plants in Cambodia, Kyrgyzstan, Nepal, Oman, Tajikistan and Uzbekistan. Data from the Global Cement Directory 2024 suggests that the company now has 10 integrated cement plants in Sub-Saharan Africa with a cement capacity of around 18Mt/yr. It also operates a number of grinding plants in these countries.

The Lafarge Africa deal is significant because a mainland China-based cement producer has finally hit the US$1bn window in merger and acquisition (M&A) activity overseas. Many potential acquisitions in the sector are linked by the press to Chinese companies these days. However, most of the activity to date has been of a plant-by-plant or piecemeal nature. Alternatively, these companies have been building their own plants around the world as part of the Belt and Road Initiative. Taiwan Cement Corporation (TCC) has spent more buying itself into Türkiye-based OYAK Cement since 2018 but it is headquartered in Taipei.

The question from here is how much further does Huaxin Cement plan to expand both in Africa and beyond? The obvious answer is that it will keep going given the state of the cement sector back home in China, the retreat of the western multinationals and the demographic trends in the region. World population growth is predicted to be fastest in Africa in the coming decades and demand for cement should follow. Outside of Africa, the ‘big’ one recently has been InterCement in Brazil. Unfortunately for Huaxin Cement though, InterCement extended its exclusivity deal with Companhia Siderúrgica Nacional (CSN) in November 2024. If the Lafarge Africa transaction completes then it will be the biggest deal yet and it will welcome a China-based cement company to the big league of international M&A. It may just be the start.